Switzerland's policy towards Europe is based on bilateral negotiations. Cooperation takes the form of bilateral agreements between Switzerland and the EU in specific areas. Beginning with the Free Trade Agreement of 1972 a whole series of bilateral agreements have been concluded step by step, notably in bilateral negotiation rounds I and II. As well as creating the conditions for mutual access to each other's markets, these agreements serve as the basis for close cooperation in areas including research, security, asylum policy, culture and the environment. This bilateral approach has been the foundation stone for Switzerland's policy of openness and cooperation with its European neighbours. The process has been endorsed by the people in a number of referenda.

The statement noted that the EU Council expressed criticism of several aspects of the relations. The Integration Office responded to the criticism:

 The present bilateral agreements with the EU are working well. Although specific matters relating to the application of these agreements are often discussed, given the intensity of the bilateral relations between Switzerland and the EU, this is normal. Switzerland criticises for example the fact that Swiss employers are required to contribute to the holiday pay funds of various EU member states, even though they already pay these contributions in Switzerland. Problems concerning interpretation of agreements can as a rule be discussed between the States concerned or within the framework of the Mixed Committee.

 In our view, the accompanying measures on the free movement of persons are overall in conformity with the Agreement on the Free Movement of Persons (FZA) and constitute appropriate measures to protect employees. Switzerland is not the only country to have insisted on such measures. A number of EU member states have also introduced such measures on the basis of a corresponding EU directive (concerning the posting of workers). Experience has shown that the accompanying measures are necessary to protect wages and working conditions in Switzerland. In this context for example, checks carried out by labour inspectors revealed breaches in one fifth of cases.

The free movement of persons has been a major factor in intensifying the bilateral relations between Switzerland and the EU. Today, over one million EU citizens live in Switzerland and over 200,000 people from the EU cross the border every day to work into Switzerland. Between 2006 and 2008, the number of cross-border services provided in Switzerland rose by around 25 percent. The EU benefits greatly from its free movement agreement with Switzerland.

 In previous discussions, Switzerland has put forward constructive proposals on specific cantonal tax regimes. However, these proposals were rejected by at least one EU member state. Switzerland has demonstrated a constructive approach to other areas of tax policy by considering, for example, a possible revision of the bilateral agreement on the taxation of savings income, and has even expressed its willingness, under certain conditions, to enter into a dialogue with the EU on the code of conduct on corporate taxation.

 Swiss regional policy is designed to promote innovation and increase value added in the rural and mountainous regions of the country. Tax concessions at federal level have only a marginal effect and are only provided for structurally weak regions. Only 10 percent of the Swiss population live in those regions where such tax concessions can be granted. Swiss regional policy measures are not anti-competitive.

 Switzerland has been supporting Central and Eastern European countries since the beginning of the 1990s within the framework of its assistance to countries in transition. It has continued this policy since 2007 by granting a contribution to reduce social and economic disparities in the enlarged EU and, in 2010, the scope of the contribution was extended to include Romania and Bulgaria. The Federal Council will decide at an appropriate time and in the context of the country's overall relations with the EU whether to maintain this support. In making this decision, the Federal Council will take past experience of the enlargement contribution into consideration as well as the needs of the recipient states.

 On 18 August 2010, the Federal Council set up an informal Swiss/EU working group with a remit to discuss with the European Commission the possible horizontal institutional provisions of future agreements between Switzerland and the EU. The working group is looking at the possibility of dynamically adjusting the agreements to comply with new EU legislation, how to ensure the coherent application and consistent interpretation of future agreements, and the development of an effective dispute procedure. We share these aims with the EU. Any solution must respect the sovereignty of both parties and the efficient operation of their institutions.

On 18 August 2010 at a special meeting dedicated to EU matters, the Federal Council decided that Switzerland would continue to conduct its relations with the EU on the basis of bilateral sector agreements. The Federal Council considers that the bilateral way is currently the most suitable way to ensure the necessary convergence of Switzerland's and the EU's respective interests.

On the face of it, we get the impression that the EU and Switzerland disagree about the very nature of their future relationship. Switzerland does not even promise to pay anything for its access to the internal market by promoting social and economic cohesion.

That still leaves different taxation issues and assorted other matters to be hammered out.

Ralf Grahn

P.S. The European Citizen noticed that the president of the European People's Party Wilfried Martens chose to defend the media law of the Hungarian EPP member party Fidesz. I would hope for the EPP to start putting the founding values of the European Union and the fundamental rights of EU citizens above the media models of Orbán and Berlusconi.